How we calculated hospitals’ diagnosis rates

To examine three medical conditions reported by Prime Healthcare Services hospitals, we conducted a computer-assisted analysis of California hospital inpatient discharge data. The data is kept by the Office of Statewide Health Planning and Development.

We analyzed a set of 2010 data that contained nearly 4 million records, the results of which are described in the main report. We also examined data from 2009 and found patterns similar to those we found in the 2010 data.

We focused on patients age 65 or older whose care was billed to Medicare and who were treated at a major acute care, or general, hospital. We also examined cases in which patients sought care for serious medical conditions, rather than substance abuse treatment, psychiatric care or physical rehabilitation. Our focus was on the ICD-9 diagnostic codes listed for each patient case at each hospital.

When comparing diagnosis rates at individual hospitals, we excluded hospitals that treated fewer than 500 patients per year, because their rates might be distorted. We also removed long-term acute care facilities, because their patients’ health problems are not comparable to those in general acute care hospitals. We excluded cases in which a patient was transferred into the hospital from another acute care hospital and also cut cases in which patients left against medical advice. Finally, the analysis left out managed-care hospitals, including those of the Kaiser Permanente system, because of differences in the way they are reimbursed for treating Medicare patients.

The analysis of cases at Prime hospitals does not include patient cases documented at Alvarado Hospital Medical Center in San Diego, which Prime bought in late 2010.

Autonomic nerve disorder and fainting

We looked at all the cases in which hospitals submitted bills reflecting the diagnosis of autonomic nerve disorder, ICD-9 code 337.9, in any of the 25 diagnosis fields. We also examined cases in which syncope, or fainting, ICD-9 code 780.2, was documented as a reason that patients sought care.

Three Prime hospitals were among the four hospitals in California in 2010 that reported seeing more nerve disorder than fainting patients. Memorial Hospital of Gardena owned by Avanti Health System of El Segundo also reported the same phenomenon.

Avanti Hospitals chief executive Poe Corn said in an e-mail that “chain physicians document appropriately and accurately the symptoms and conditions of the patients they care for to assure excellence in quality patient care.”

We looked at the percentage of total Medicare cases in which hospitals reported seeing one of five codes for encephalopathy. Those included 348.30, encephalopathy, unspecified; 348.31, metabolic encephalopathy; 348.39, other encephalopathy; 349.82, toxic encephalopathy; and 768.7, hypoxic-ischemic encephalopathy.

Hospitals not owned by Prime Healthcare in 2010 reported that 3.6 percent of Medicare patients had encephalopathy. However, Prime diagnosed the condition at a rate five times greater, or 18 percent of its patients. One Prime hospital, Encino Hospital Medical Center, topped the list, diagnosing the condition in 36 percent of its Medicare patients.

Overall, among Medicare patients treated in 2010, we found the following number of cases:

Medicare determines how to pay hospitals for each patient’s care based on severity of their illness. Hospital pay is also based on the cost of goods and services near that facility, so payment for the same conditions vary throughout the state.

Some conditions are considered complications or major complications and can entitle hospitals to payment bonuses. Other conditions do not carry such a bonus, but are more lucrative to report as a primary diagnosis, such as autonomic nerve disorder, in contrast to fainting. Here’s how we calculated how much hospitals can earn for reporting cases of certain conditions.

Treating encephalopathy entitles hospitals to a payment bonus. Treating a pneumonia patient who also has the brain condition can net a hospital about $14,000. Treating a pneumonia patient who also has an altered level of consciousness, a similar but less severe condition, nets a hospital half that amount, $7,000.

Treating malignant hypertension also entitles hospitals to a payment bonus. Treating a pneumonia patient who also has malignant hypertension can net a hospital about $10,000. However, treating a patient who has pneumonia and essential hypertension, the more common form, earns the hospital about $7,000.

Treating autonomic nerve disorder pays more than treating fainting, and the difference in pay grows larger if that patient has an additional major complication. Treating a patient with nerve disorder pays about $8,500, compared to $7,000 for fainting. However, a hospital can earn about $12,500 for treating a nerve disorder patient with a major complication. A fainting patient with a major complication still nets the hospital about $7,000.